FINRA Rule 3210: Accounts at Other Broker-Dealers and Financial Institutions
With registration and administrative actions covered, the next two sections address specific FINRA rules that govern agent conduct. Rule 3210 ensures that an agent's employer knows about all outside securities accounts.
Purpose of Rule 3210
FINRA Rule 3210 governs accounts opened or maintained by associated persons (agents) at firms other than their employer. The rule is designed to prevent agents from engaging in undisclosed securities activity outside the supervision of their employer.
The Three-Step Process
Rule 3210 requires three steps whenever an agent opens an account at another firm:
| Step | Who Acts | What Happens |
|---|---|---|
| 1. Prior written consent | Agent requests from employer | Agent must obtain prior written consent from the employer broker-dealer before opening the account |
| 2. Notification to executing firm | Agent notifies outside firm | Agent must notify in writing the executing member (or other financial institution) of the agent's affiliation with the employer |
| 3. Duplicate statements | Employer requests from outside firm | Upon written request by the employer, the executing firm must transmit duplicate copies of confirmations and statements for the account |
Exam Tip: Gotchas
- Rule 3210 requires THREE steps. (1) Agent gets written consent from employer, (2) agent notifies the outside firm of the affiliation, and (3) outside firm provides duplicate statements to the employer upon request. All three must happen.
Covered Financial Institutions
The rule applies to accounts at:
- Other broker-dealers
- Investment advisers
- Banks
- Insurance companies
- Trust companies
- Credit unions
- Investment companies
Pre-Existing Accounts
If the account was opened before the person became associated with the employer:
- The associated person must obtain the employer's written consent to maintain the account within 30 calendar days of becoming associated
- The associated person must also notify the executing firm of the new affiliation
Exam Tip: Gotchas
- Pre-existing accounts get a 30-day grace period, not an exemption. The agent still must obtain written consent to maintain the account and notify the executing firm.
- The rule requires PRIOR written consent. After-the-fact disclosure does not satisfy the requirement.
Accounts of Related Persons
The associated person is presumed to have a beneficial interest in accounts held by:
- The associated person's spouse
- A child of the associated person (or the spouse) who resides in the same household or is financially dependent on the associated person
- Any other individual over whose account the associated person has control and to whom the associated person materially contributes financially
This presumption can be rebutted by demonstrating that the associated person derives no economic benefit from, and exercises no control over, the account.
Exam Tip: Gotchas
- Spousal and dependent child accounts are presumed to be the agent's accounts under Rule 3210. The agent must disclose these accounts and get employer consent, just as if they were the agent's own accounts.
Exempt Account Types
The following account types are exempt from Rule 3210 requirements:
- Unit investment trusts
- Municipal fund securities (including Section 529 qualified tuition programs)
- Variable contracts (variable annuities, variable life insurance)
- Registered investment company securities (mutual funds)
- Monthly Investment Plan accounts
The rationale: these products generally do not involve the same kind of discretionary trading activity that the rule is designed to monitor.
Exam Tip: Gotchas
- Mutual funds and variable annuities are exempt from Rule 3210. These products do not involve the discretionary trading the rule is designed to monitor.
- The employer can request duplicate statements, but the executing firm only provides them upon request. It is not automatic.